Some defendents set up grocery stores to carry out fraud, U.S. attorney says

SAVANNAH | A federal indictment unsealed on Tuesday in Savannah charges 54 defendants in a massive, statewide scheme to defraud the WIC and Food Stamp programs.

The indictment represents one of the largest federal food-supplement program frauds ever prosecuted, U.S. Attorney Edward J. Tarver said at an afternoon press conference.

The fraud involved the purchase of more than $18 million in Women, Infant and Children, or WIC, vouchers and Supplemental Nutrition Assistance Program, also known as food stamp benefits, for some of the nation’s neediest families and chldren. Benefits were purchased for cash through a number of purported grocery stores in Savannah, Garden City and other cities throughout the state, then reclaimed for the full amount.

In addition to the 54-defendant indictment, 34 other defendants have been charged in separate indictments in the sale of WIC vouchers and food stamp benefits for cash. Those defendants are charged with selling more than $1,000 worth of their own benefits or of benefits of minor children,

The 54-defendant indictment says a number of defendants conspired to open purported grocery stores for the purpose of buying WIC and Food Stamp benefits for cash.

The scheme ”goes to the heart of the program,” Tarver said, because it takes those benefits for uses other than what the program is intended to do.

“The government alleges that the defendants stole taxpayer-funded benefits intended to feed the most needy families and children in our communities,” Tarver said.

First Assistant U.S. James Durham said that 70 of the 88 defendants had been apprehended by Tuesday afternoon in what FBI Supervisory Senior Resident Agent Eugen Kowel said were actions that federal and local officers began “at the crack of dawn.” He called the action “an example of what we can accomplish in the law enforcement community when we work in partnership.”

According to the 34-page indictment, one of the stores was Super Kids Variety Store located at 302 W. Victory Drive in Savannah, which was managed by defendant Henry “Grand Hustle” Ward, who also worked out of Platinum Kids, at 612 Highway 80 West in Garden City.

The scheme involved the illegal purchase of more than $18 million worth of benefits between December 2009 and December 2012, the indictgment charged.

Once the purported stores were opened and approved as WIC and Food Stamp vendors, many of the defendants canvassed low-income neighborhoods and solicited WIC and Food Stamp participants to illegally exchange their benefits for cash rather than for food, the government said.

The defendants then bought WIC and Food Stamp benefits for cash at a fraction of the amount the USDA paid for what it believed to be legitimate purchases under the two programs. The defendants are also accused of conspiring to launder more than $18 million in proceeds received from the fraud upon the WIC and Food Stamp programs.

Karen Citzen-Wilcox, special agent in charge of the U.S. Department of Agriculture Office of Inspector General, said the investigation and prosecution “should send a strong zero-tolerance message to those individuals who create businesses for the purpose of specifically defrauding the taxpayer” benefit programs.